UK Economy Contracts by 0.1% in October, Marking Fourth Consecutive Month of Decline
The UK economy shrank by 0.1% in October 2025, following a 0.1% decline in September and a flat August, marking the fourth consecutive month of contraction. Economists had predicted 0.1% growth for October, making this a notable miss. Over the three months to October, GDP was down 0.1% on a rolling basis.
The services sector led the decline with a 0.3% fall, impacted by weak car sales, retail, and computer programming/consultancy. Construction output also decreased by 0.6%. In contrast, production (manufacturing) rose by 1.1% as it began to recover from a cyber-attack on Jaguar Land Rover (JLR) that had significantly disrupted car production and supply chains. Despite this improvement, car industry output remained about 21.8% below August levels. The JLR cyber-attack inflicted an estimated £1.9 billion of damage.
Several sectors including services, production, and construction reported postponing decisions as businesses awaited the government's budget announcement. Notably, manufacturers, construction firms, wholesalers, programmers, real estate companies, and employment agencies delayed investment and hiring choices due to this uncertainty.
Financial experts commented on the UK's economic state: Suren Thiru of the Institute of Chartered Accountants noted that the data increases the likelihood of a Bank of England rate cut. Barret Kupelian of PwC emphasized that while the JLR attack contributed, the broader cause was market caution ahead of the budget. Scott Gardner from JP Morgan highlighted persistent productivity weakness and budget speculation dampening demand. The Bank of England is broadly expected to reduce interest rates by 0.25 percentage points to 3.75% at its 18 December meeting, with expectations that weaker momentum will assist in reducing inflation.
Politically, Sir Mel Stride described the figures as extremely concerning, attributing them to Labour's mismanagement of the economy. A Treasury spokesperson responded that the government intends to defy growth forecasts, create good jobs, and invest in public services. Budget measures, including relief on energy, prescriptions, and fuel duty, are anticipated to reduce headline inflation by up to about an unstated amount.
